Financial Statement Assignment Solutions Report

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Assignment Detail:-

  • Words: 2500


Question 1

(A) Journalize the following transactions and post them to ledger. From the following transactions of Phoenix Inc for Oct, 2016.

(i)Journalize the below transactions

(ii)Post the Journal entries in to ledger accounts


Date Transactions
Oct 1 2016 Niel started business with cash $ 800,000
Oct 2  purchased goods worth $ 3000
Oct 15 Sold goods for $ 25000
Oct 18 Purchased stationeries $4000
Oct 23 Purchased furniture for $ 24,000
Oct 25 Paid electricity charges with cash $3000
Oct 26 Paid Salary $18000
Oct 28 Paid rent $500


(B) “Bookkeeping is synonymous to accounting” Analyze this statement.(500 words)



Question 2

(A) Prepare income statement and balance sheet of Indus Corp as on 31st Dec, 2016.

Particulars Amount ($ ‘000)
Sales 37,436
Cash 4,895
Cost of goods sold 26,980
Accounts Payable 7,156
Accounts Receivable 5,714
Selling, general, and administrative expense 3,624
Inventories 8,517
Research and Development expense 1,982
Plant and Equipment 7,154
Interest expense 450
Long term liability 20105
Land 981
Income tax expense 1,100


(B) Why are financial statements are so important for a business?(500 words)



Question 3

(A) ABC Industries is in the Business of manufacturing agro equipment. Prepare the cash budget for the quarter April to June, based upon the following data and additional information.

Month Sales Purchases Wages Selling Overheads Office Overheads Mfg.
$ $ $ $ $ $
January 60,000 36,000 9,000 4,000 2,000 4,000
February 62,000 38,000 8,000 5,000 1,500 3,000
March 64,000 33,000 10,000 4,500 2,500 4,500
April 58,000 35,000 8,500 3,500 2,000 3,500
May 56,000 39,000 9,000 4,500 1,000 4,000
June 60,000 34,000 8,000 4,500 1,500 3,000


Additional Information:

  1. The Cash balance at 1 April is $ 800000.
  2. Sales: 40% cash sales and 60% is collected in the month following sales.
  3. Purchases are all on credit and are paid after 2 months.
  4. A plot of land was purchased in December (Previous year) and $ 87,000 is payable in April.
  5. Wages are paid two month in arrear and all overheads are settled after a month  they are incurred.
  6. ABC Industries is due to repay a loan of $ 16,000 in May.
  7. A dividend of $ 80,000 is expected to be received in May.


(B) “With zero-based budgeting, each expenditure item must be justified for the new budget period.” Explain.(500 words)



Question 4

A.(i)  Moment Inc. provides the following data for June 2016 when 15,000 Units are manufactured:

Standard Material Cost (Per Unit)

8.50 kg @ $ 7.50/kg

Actual Material Cost (Per Unit)

6.75 kg @ $ 13.5/kg

StandardLabor cost (Per Unit)

5.5 hrs @ $ 15/hr

Actual Labor cost (Per Unit)

6.5 hrs @ $ 12.2/hr


Direct Material Price Variance

Direct Material Quantity/Usage Variance

Total Material Cost Variance

Direct Labor Rate Variance

Direct Labor Efficiency Variance

Total Labor Cost Variance


(ii) Calculate Variable Overhead Spending Variance if actual labor hours used are 260,standard variable overhead rate is $10.40 per direct labor hour and actual variable overhead rate is $9.30 per direct labor hour. Also specify whether the variance is favorable or unfavorable.


(iii)  Calculate the variable overhead efficiency variance using the following figures:

              Number of Units Produced 620
Standard Direct Labor Hours Per Unit 0.2
              Actual Direct Labor Hours Used 260
              Standard Variable Overhead Rate $10.40
  1. Managers of most organizations continually plan for the future, and after the plan is implemented, managers assess whether they achieved their goals. What are the two functions that enable management to go through the process of continually planning and evaluating?(500 words)



Question 5

  1. Robest Industries produces only one product. The following revenues and cost have     been estimated for the forthcoming month:

Selling price, $ 250 per unit (SP)

Variable cost, $ 100 per unit (VC)

Fixed Cost, $ 56000

The managers of the firm wish to know the following:

  1. Calculate contribution margin per unit
  2. Calculate contribution margin ratio.
  3. BEP in units
  4. Calculate BEP in sales.
  5. “Good Managers must not only be able to understand the conceptual underpinnings of cost behavior, but they must also be able to apply those concepts to real world data that do not always behave in the expected manner. “Explain cost behavior analysis.(500 words)


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